Mortgage lenders have started to raise fixed rates, signalling an end to the prolonged period of falling interest rates for homeowners.
Two lenders increased their fixed mortgage rates yesterday following the European Central Bank's statement on Thursday that there was increasing evidence of an economic recovery in the euro zone.
First Active was the first to publicly announce its reversal of the recent downward trend. IIB Homeloans also increased the cost of its fixed-rate mortgages, signalling that the time to secure peak value for fixed mortgages may have passed.
The increases follow moves by EBS Building Society, which increased its fixed rates last month.
Mr Brendan O'Hora, head of marketing at First Active, said he expected other lenders to follow suit. "I think we will see pretty much everybody raise their fixed rates in a matter of days if not weeks," he said.
It is understood other lenders considering adjusting their rates upwards include the Republic's biggest lender, Permanent TSB, which currently has the most competitive two-year fixed rate at 2.99 per cent.
First Active's two-year fixed rate now stands at 3.49 per cent, up from 2.98 per cent. Its three-year fixed rate rose from 3.39 per cent to 3.89 per cent, its five-year fix increased from 3.99 per cent to 4.39 per cent, and its 10-year fix is now 5.29 per cent, up from 4.99 per cent.
Its one-year fixed rate remains unchanged at 2.34 per cent.
IIB Homeloans' one-year fixed rate increased from 2.59 per cent to 2.79 per cent. Its two-year fixed rate rose to 3.69 per cent, up from 3.39 per cent. Three-year fixes at IIB are now 4.29 per cent, up from 3.59 per cent, while its five-year fixed rate rose from 4.19 per cent to 4.79 per cent.
Mr Austin Hughes, chief economist of IIB Bank, said the increases were in line with expectations that interest rates would rise. "Within the past month or two, emerging signs of stronger activity in the global economy, optimistic comments by central bankers and worries about large budget deficits have caused a dramatic rise in long-term rates around the globe as investors concluded that the interest rate cycle would follow economic activity upwards," he said.
"The dramatic rises in wholesale term interest rates seen in global financial markets have substantially increased the cost of funds to IIB in supplying the fixed-rate product we provide to our customers," he said.
